NOTICE AND PROXY STATEMENT
NAIC GROWTH FUND, INC.
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
May 18, 2000
To the shareholders of the NAIC Growth Fund, Inc.:
Notice is hereby given that the 2000 Annual Meeting of Shareholders (the
Meeting) of the NAIC Growth Fund, Inc. (the Fund) will be held at the Funds
principal executive offices located at 711 West Thirteen Mile Road, Madison
Heights, Michigan, on Thursday, May 18, 2000 at 2:00 p.m. for the following
purposes:
1. To elect a Board of eight (8) Directors;
2. To ratify or reject the selection of Arthur Andersen LLP as
independent auditors of the Fund for the calendar year ending December 31,
2000; and
3. To act upon such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 23, 2000 as
the record date for the determination of shareholders entitled to vote at the
Meeting or any adjournment thereof.
You are cordially invited to attend the Meeting. Shareholders who do not
expect to attend the Meeting in person are requested to complete, date and
sign the enclosed proxy form and return it promptly in the envelope provided
for that purpose. The enclosed proxy is being solicited on behalf of the
Board of Directors of the Fund.
By Order of the Board of Directors
Lewis A. Rockwell
Secretary
April 7, 2000
PROXY STATEMENT
NAIC GROWTH FUND, INC.
711 West Thirteen Mile Road
Madison Heights, Michigan 48071
2000 Annual Meeting of Shareholders
May 18, 2000
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of NAIC Growth Fund, Inc., a
Maryland corporation (the Fund), to be voted at the 2000 Annual Meeting
of Shareholders of the Fund (the Meeting), to be held at the executive
offices of the National Association of Investors Corporation, 711 West
Thirteen Mile Road, Madison Heights, Michigan 48071, at 2:00 p.m. on May 18,
2000. The approximate mailing date of this Proxy Statement is April 7, 2000
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein.
Unless instructions to the contrary are marked, proxies will be voted for
The election of eight Directors and for the ratification of the independent
auditors. Any proxy may be revoked at any time prior to the exercise
thereof by giving written notice to the Secretary of the Fund.
The Directors have fixed the close of business on March 23, 2000 as the
record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment thereof. Shareholders
on the record date will be entitled to one vote for each share held, with
no shares having cumulative voting rights. As of December 31, 1999, the
Fund had outstanding 1,732,982 shares of common stock, par value $0.001 per
share. To the knowledge of management of the Fund no person owned
beneficially more than 5% of its outstanding shares at such date.
To the knowledge of the Fund as of December 31, 1999, the following number
of shares of the Funds common stock $0.001 par value were beneficially
owned by each director and by all directors and officers of the Fund as a
group:
Number of Shares and Nature
of Beneficial Ownership as of Percent
Owner December 31, 1999 (a) of Class
All Officers and Directors as
a group (8 persons) 45,843 2.65
Thomas E. OHara 7,659 *
Kenneth S. Janke 13,135 *
Lewis A. Rockwell 12,750 *
Peggy L. Schmeltz 7,036 *
Cynthia P. Charles 1,458 *
Carl A. Holth 1,176 *
James M. Lane 2,000 *
Benedict J. Smith 629 *
(a) The nature of beneficial ownership of shares shown in this column is
sole voting and investment power unless otherwise indicated. The shares
shown for Messrs. OHara, Janke and Rockwell include 6,483 shares owned by
the Mutual Investment Club of Detroit Limited Partnership, a Michigan
limited partnership, of which Messrs. OHara, Rockwell and Janke are general
partners. The individual retirement accounts of Messrs. OHara and Janke
are limited partners of the Mutual Investment Club of Detroit Limited
Partnership. The shares shown for Messrs. OHara and Janke also include 232
shares owned by the National Association of Investors Corporation and held
by NAIC Associates, a Michigan co-partnership, a nominee partnership in
which Messrs. OHara, Janke and James T. Sobol (Vice President of Finance
of the National Association of Investors Corporation) are the sole partners.
The shares shown for Mr. Janke include 6,120 shares owned by a trust of which
he is trustee and 300 shares owned by his wife. The shares shown for Mrs.
Charles include 729 shares owned jointly with her children. The shares shown
for Mr. Holth are owned by a revocable living trust of which he is trustee.
* Less than 1%.
The Directors have elected three (3) officers for the Fund. The following
sets forth information concerning each of these officers:
Office Name and Age Served Since
Chairman of the Board and Chief Thomas E. OHara - 84 1989
Executive Officer
President, Chief Operating Officer Kenneth S. Janke - 65 1989
And Treasurer
Secretary Lewis A. Rockwell - 81 1989
The Fund has no standing nominating or compensation committees of the Board
of Directors, or committees performing similar functions. The Fund has a
Management Proxy Committee comprised of Messrs. OHara and Janke to cast
votes represented by properly executed proxies. The Fund also has an audit
committee comprised of Messrs. OHara, Holth and Smith. Messrs. Holth and
Smith are independent directors within the meaning of Rule 4200(a)(15) of the
National Association of Securities Dealers listing standards. A copy of the
report of the audit committee is attached hereto as Exhibit A. The Board of
Directors of the Fund has not adopted a written charter for the audit
committee.
The Directors of the Fund know of no business other than that mentioned in
Items 1 and 2 of the Notice of Meeting which will be presented for
consideration at the Meeting. If any other matter is properly presented,
it is the intention of the persons named in the enclosed proxy to vote in
accordance with their best judgment.
PROPOSAL NO. 1
(Election of Directors)
A Board of eight (8) Directors to serve for a term of one (1) year, or
until their successors are elected and qualified, is to be elected at the
Meeting. Unless authorization to do so is withheld, it is intended that
the proxies will be voted for the election of the nominees named below.
Directors will be elected by a plurality of votes cast at the Meeting. If
any nominee becomes unavailable for election, an event not now anticipated
by the Board of Directors, the proxy will be voted for such other nominee
as may be designated by the Board of Directors. All nominees are presently
Directors of the Fund and have consented to continuing as Directors.
Listed below are all nominees and their backgrounds.
Nominee Directors
Director
Name and Address Age Position Held Since Business Experience
Thomas E. OHara * 84 Chairman of the Board, 1989 Chairman of the Board and
Chief Executive Officer
Trustee of the National
and Director Association
of Investors Corporation
(NAIC) and Growth Fund
Advisor, Inc.,the Funds
Investment Adviser (the
Investment Adviser).
Kenneth S. Janke * 65 Director, President, 1989 President and Trustee
Chief Operating Officer of NAIC and Investment
And Treasurer Adviser;Director,AFLAC;
Partner,NAIC Associates
Lewis A. Rockwell * 81 Director and Secretary 1989 Counsel to the law firm
of Bodman, Longley &
Dahling LLP, counsel to
the Fund, NAIC and the
Investment Adviser;
Trustee and Secretary of
the Investment Adviser.
Peggy L. Schmeltz * 72 Director 1989 Adult Education Teacher.
Cynthia P. Charles 78 Director 1989 Retired.
Carl A. Holth 67 Director 1989 President and Director,
Greater Detroit Capital
Corporation; Director,
Sunshine Fifty, Inc. and
Harrison Piping Supply,
Inc.
Benedict J. Smith 79 Director 1996 Retired; Director and
Treasurer, Detroit
Executive Service Corps.
Director, Vista Maria;
Trustee, Henry Ford
Health System Behavioral
Services
James M. Lane 70 Director 1997 Retired; Director,
Chateau Communities,Inc.,
Wheaton College, William
Tyndale College, Baseball
Chapel, Inc. and
Christian Camps, Inc.
* An interested person of the Fund within the meaning of Section
2(a)(19) of the Investment Company Act of 1940.
There were four (4) meetings of the Board of Directors held during the past
year. Each Director attended at least 75% of the meetings of the Board of
Directors and committees of the board on which he or she served during 1999
except Mr. Lane.
Compensation of Directors and Officers
and Ownership Reports
The Directors of the Fund who are not affiliated with the Investment Adviser
or the Investment Advisers affiliates are paid $1,500 per year plus $100
per meeting attended. The Chairman and President are not compensated by the
Fund, except for out-of-pocket expenses relating to attendance at meetings
and other operations of the Fund.
Directors and officers of the Fund and certain of its affiliates and
beneficial owners of more than 10% of the Funds common stock are required
to file initial reports of ownership and reports of changes in ownership of
the Funds common stock pursuant to Section 16(a) of the Securities Exchange
Act of 1934, as amended. The Fund has reviewed such reports received by it
and written representations of such persons who are known by the Fund, and
based solely upon such review, the Fund believes that during the year ended
December 31, 1999 all filing requirements were met.
Investment Advisor
Growth Fund Advisor, Inc., a Michigan corporation which is registered with
the Securities and Exchange Commission under the Investment Advisers Act of
1940 (the Investment Adviser), provides the Fund with investment advisory
services and, subject to the authority of the Board of Directors of the Fund,
is responsible for the overall management of the Funds business affairs.
The Investment Adviser is a wholly owned subsidiary of N.A.I.C. Holding
Corporation, a Michigan corporation which conducts no business activities.
National Association of Investors Corporation (NAIC) and N.A.I.C. Holding
Corporation are each wholly owned subsidiaries of the National Association
of Investment Clubs Trust (the Trust).
The Fund has entered into an Investment Advisory Agreement dated October 2,
1989, as amended (the Advisory Agreement), between the Fund and the Funds
former investment adviser, NAIC. The Investment Adviser took over the
investment advisory services to the Fund under the Advisory Agreement on
September 1, 1999. The shareholders approved the continuance of the
Advisory Agreement through June 30, 1993 and modification to the Advisory
Agreement at the Annual Meeting of Shareholders which was held on May 21,
The Advisory Agreement, which became effective on July 2, 1990,
continues in effect for a period of two years from its effective date and
thereafter only so long as such continuance is specifically approved at
least annually by the Board of Directors of the Fund or by a vote of the
majority of the outstanding voting securities of the Fund. The continuance
of the Advisory Agreement through June 30, 2001 was approved by the Board
of Directors of the Fund at its meeting on December 9, 1999.
The address of the Investment Adviser is the same as the Fund. Messrs.
OHara, Janke and Rockwell, who are directors and officers of the Fund,
are also trustees and officers of the Trust. See Proposal No. 1 - Nominee
Directors. The Fund is the Investment Advisers sole advisory client.
The following table set forth the name, title and principal occupation of
the officers and trustees of the Investment Adviser. The address of each
is the address of the Fund.
Position With
Growth Fund
Name Advisor, Inc. Other Principal Occupation
Warren B. Alexander Trustee Retired
Donald E. Danko Trustee Managing Editor of Better Investing
Lorrie Gustin Trustee Consultant, Stand In Office Services
(1995-Present);Vice President, W.R.
Gustin & Associates, Inc. (1956-1995)
Robert W. Hague Trustee Investment adviser for SIGMA
Investment Counselors (1989-Present)
Richard H. Holthaus Trustee Vice President, Fleishman-Hillard
(1992-Present)
Kenneth S. Janke Trustee and President and Trustee of NAIC
President
Kenneth R. Lightcap Trustee Weller, OSullivan, Zucherman &
Lightcap,(1996-Present) Vice President,
Director Public Relations, Pedone &
Partners (1994-1996)
Leroy F. Mumford Trustee Retired
Thomas E. OHara Trustee and Chairman and Trustee of NAIC
Chairman of
The Board
Lewis A. Rockwell Trustee and Counsel to the law firm of Bodman,
Secretary Longley & Dahling LLP (1990-Present);
President,Director, Secretary,
Sunshine-Fifty, Inc.
Ralph L. Seger, Jr. Trustee President, Seger-Elvekrog, Inc.
(1981-Present)
Peggy L. Schmeltz Trustee Adult Education Teacher
Elizabeth N. Hamm Trustee Adult Education Teacher
Robert Wynn Trustee Financial Education Officer, Wisconsin
Dept.of Financial Institutions
(1998-Present); Director of Minority
Business Development, Wisconsin Dept.
of Commerce (1985-1998)
The address of the Trust is the address of the Fund. The trustees of the
Investment Adviser are also the trustees of the Trust. No officer, director
or trustee of the Fund or the Investment Adviser has any direct or indirect
interest in the Investment Adviser or the Trust.
Advisory Agreement
The Advisory Agreement provides that, subject to the direction of the Board
of Directors of the Fund, the Investment Adviser is responsible for the
actual management of the Funds portfolio. The responsibility for making
decisions to buy, sell or hold a particular security rests with the
Investment Adviser, subject to review by the Board of Directors of the
Fund.
Fees and Expense
For the services provided by the Investment Adviser under the Advisory
Agreement, the Fund is to pay to the Investment Adviser a monthly fee at
an annual rate of three-quarters of one percent (0.75%) of the weekly net
assets of the Fund; however, if the weekly net asset value of the Fund is
below Three Million Eight Hundred Thousand and 00/100 ($3,800,000.00)
Dollars, no Investment Advisers fee will be paid or accrued by the Fund
to the Investment Adviser for that week. The Investment Adviser was paid
fifty percent (50%) of the three-quarters of one percent (0.75%) for 1999.
In addition to the fee of the Investment Adviser, the Fund pays all of
the other costs and expenses of its operation including, among other things,
expenses for legal and auditing services, costs of printing proxies, stock
certificates and shareholder reports, charges of the custodian, transfer
agent, Securities and Exchange Commission fees, fees and expenses of
unaffiliated directors, accounting and pricing costs, membership fees and
trade associations, insurance, interest, brokerage costs, taxes, stock
exchange listing fees and expenses, expenses of qualifying the Funds
shares for sale in various states and other miscellaneous expenses properly
payable by the Fund. The Advisory Agreement provides that in the event the
average weekly net asset value of the Fund falls below Three Million Eight
Hundred Thousand and 00/100 ($3,800,000.00) Dollars, the Investment Adviser
will not be paid its fee, nor will such fee be accrued. The Advisory
Agreement provides that the Fund may not incur annual aggregate expenses in
excess of two percent (2%) of the first Ten Million and 00/100
($10,000,000.00) Dollars of the Funds average net assets, one and one-half
percent (1 1/2%) of the next Twenty Million and 00/100 ($20,000,000.00)
Dollars of the average net assets, and one percent (1%) of the remaining
average net assets for any fiscal year. Any excess expenses shall be the
responsibility of the Investment Adviser. The pro rata portion of the
estimate annual excess expenses will be offset against the Investment
Advisers monthly fee. In the event such amount exceeds the fee payable
in any month, no fees shall be collected by the Investment Adviser at
such time.
Termination
The Advisory Agreement is not assignable within the meaning of the
Investment Advisers Act of 1940. The Advisory Agreement may be terminated
at any time without the payment of any penalty by the Board of Directors
of the Fund or by a vote of the majority of the outstanding voting
securities of the Fund. The Investment Adviser may terminate the Advisory
Agreement upon sixty days notice to the Fund.
Use of Name
NAIC has become well known through its educational activities and
publications. The Fund had no prior operating history and therefore at
the time of the initial offering was not well known. As a result, NAIC
consented to allow the Fund to use NAIC as part of the Funds name. The
Fund acknowledges that NAIC may withdraw from the Fund the use of its name,
however in doing so, the Investment Adviser agrees to submit the question
of continuing the Advisory Agreement to a vote of the Funds shareholders
at that time. The Advisory Agreement also reserves the right of the
Investment Adviser to grant the use of its name in whole or in part to
another investment company or business enterprise. However, the Investment
Adviser agrees to submit the question of continuing the Advisory Agreement
to the vote of the Funds shareholders at that time.
Portfolio Transactions and Brokerage
Subject to the policies established by the Board of Directors of the Fund,
the Investment Adviser is primarily responsible for the execution of the
Funds portfolio transactions and the allocation of brokerage. In
executing such transactions, the Investment Adviser seeks to obtain the most
favorable execution and price taking into account such factors as price,
size of order, difficulty of execution and operation of facilities of
the firm involved and the firms risk in positioning a block of securities.
The Investment Adviser and the Fund have no obligations to deal with any
broker or group of brokers in executing transactions in portfolio
securities. The Investment Adviser is also authorized to consider, in
selecting brokers or dealers with which such orders may be placed, certain
statistical, research and other information or services furnished to the
Investment Adviser by brokers or dealers (the terms statistical, research
and other information or services include advice as to the value of
securities, the responsibility of investing in, purchasing or selling
securities; the availability of securities or purchasers or sellers of
securities; and the furnishing of analysis and reports concerning issuers,
industries, securities, economic factors and trends, and portfolio strategy
in the performance of accounts). The Investment Adviser may pay a broker a
commission in excess of that which another broker might charge in
recognition of the value of the statistical, research and other information
provided by such broker.
The Investment Adviser will also make recommendations as to the manner in
which voting rights, rights to consent to corporate action or other rights
pertaining to the Funds portfolio securities will be exercised.
A substantial portion of the securities in which the Fund will invest may
be traded in the over-the-counter market, and the Fund intends to deal
directly with the dealers who make markets in the securities involved,
except in those circumstances where better prices and execution are
available elsewhere. Under the Investment Company Act of 1940
(the 1940 Act), persons affiliated with the Fund are prohibited from
dealing with the Fund as principal in the purchase and sale of securities.
Since transactions in the over-the-counter market usually involve
transactions with dealers acting as principal for their own account,
the Fund will not deal with affiliated persons in connection with such
transactions. However, affiliated persons of the Fund may serve as its
broker in the over-the-counter market and other transactions conducted
on an agency basis.
The Board of Directors of the Fund has adopted certain policies
incorporating the standards of Rule 17e-1 issued by the Securities and
Exchange Commission under the 1940 Act, which require that the commissions
paid to affiliates of the Fund, or to affiliates of such persons, must be
reasonable and fair compared to the commissions, fees or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of
time. The rule and procedures also contain review requirements and require
the Investment Adviser to furnish reports to the Board of Directors of the
Fund and to maintain records in connection with such reviews. After
consideration of all factors deemed relevant, the Board of Directors of
the Fund will consider from time to time whether the advisory fee will be
reduced by all or a portion of the brokerage commission given to brokers
that are affiliated with the Fund.
The aggregate dollar amount of brokerage commissions paid by the Fund
during its fiscal year ended December 31, 1999 was $15,053. No such fees
were paid to any brokers that are affiliated with the Fund.
PROPOSAL NO. 2
(Selection of Independent Accounts)
The Board of Directors has selected Arthur Andersen LLP, independent
accountants, to examine the financial statements of the Fund for the year
ending December 31, 2000. Unless a contrary specification is made, the
accompanying proxy will be voted in favor of ratifying the selection of
such accountants. Representatives of Arthur Andersen LLP are expected to
be present at the Meeting where they will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions. There has been no change in the Funds accountants
since the creation of the Fund. The Board of Directors recommends that
shareholders vote FOR the ratification of Arthur Andersen LLP as the
independent accountants for the Fund.
PROPOSALS OF SHAREHOLDERS
Shareholder proposals for the 2001 Annual Meeting of Shareholders must be
received by the Fund at P.O. Box 220, Royal Oak, Michigan 48068 before the
close of business on December 10, 2000 for consideration for inclusion in
the Funds proxy statement. Shareholder proposals should be addressed to
the attention of the Funds Secretary.
MISCELLANEOUS
The Board of Directors is not aware of any other business that will be
presented for action at the Meeting. If any other business comes before
the Meeting, the Management Proxy Committee has been directed by the Board
of Directors to cast such votes at its discretion. The cost of preparing
and mailing the notice of meeting, proxy statement and proxy to the
shareholders will be borne by the Fund.
By Order of the Board of Directors
April 7, 2000
Lewis A. Rockwell, Secretary
EXHIBIT A
Report of Audit Committee
April 7, 2000
To the Board of Directors of the NAIC Growth Fund, Inc.:
We have reviewed and discussed with management the Funds audited financial
statements as of and for the year ended December 31, 1999.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended, by the Auditing Standards Board of the
American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1,
Independence Discussions with Audit Committees, as amended, by the
Independence Standards Board, and have discussed with the auditors the
auditors independence.
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the financial statements referred to above be
included in the Funds Annual Report on Form N-SAR for the year ended
December 31, 1999.
Thomas E. OHara, Chairman
Carl A. Holth, Member
Benedict J. Smith, Member
